ARCBEST CORP /DE/ Q1 FY2025 earnings call

• Partnerships and Innovations: Partnered with a lighting manufacturer to modernize shipping operations, achieving 5% savings. Anticipated NMFC classification changes and positioned to support customers with space-based pricing. Launched Voxx Vision 3D perception technology in pilot phase.
• Operational Priorities: Focus on profitable growth, premium service, and optimization. Sales pipeline accelerated with 31% improvement in deal execution speed. Managed transportation solution saw double-digit growth. Shipment visibility improved with majority of customers tracking shipments digitally. Onboarding and retention efforts strengthened. City route optimization phases rolled out, with Baltimore service center seeing reduced planning hours. Operational experts visited facilities, resulting in $6 million savings.
• Digital Initiatives: Carrier portal adoption at 22%, 45% of shipments digitally fulfilled. Inbound call automation pilot launched, digital quote augmentation advanced.

Asset-based Business

• First quarter revenue: $646 million, per day decrease of 3%.
• ABS operating ratio: 95.9%, an increase of 390 basis points over Q1 2024. Sequentially, it increased 390 basis points, within historical range of 350-400 basis points.
• Daily shipments: Flat year over year. Weight per shipment decreased by 4%, resulting in a 4% decrease in tons per day. Revenue per hundredweight increased by 2% y/y, partially offset by declining fuel costs.
• April 2025 trends: Daily shipments up 4% y/y, daily tonnage up 1% y/y. Revenue per hundredweight down 2% y/y, less than 1% excluding fuel surcharges due to mix of easier-to-handle shipments.

Asset-light Business

• First quarter revenue: $356 million, daily decrease of 9% y/y. Shipments per day down 4%, offset by double-digit growth in managed solution.
• Revenue per shipment down 6% due to soft freight market and growth in managed business with smaller shipment sizes.
• Non-GAAP operating loss: $1.2 million in Q1 2025 vs $4.7 million in Q1 2024. April 2025 daily revenue down 10% due to fewer less profitable truckload volumes. Expected non-GAAP operating loss for Q2 2025: $1-$2 million

• 2025 capital expenditure guidance: $225 to $275 million, expecting lower end of range. Acquired leases for two facilities through yellow property auction and returned over $24 million to shareholders.
• Anticipated second quarter operating ratio improvement: Within historical range of 300 to 400 basis points improvement sequentially

• Disruptions from soft industrial production and changing trade policies.
• Impact of NMFC classification changes on the industry.
• Macro-economic uncertainties affecting freight volumes and pricing

Q: Daniel Imbro from Stephens Inc. asked about near-term setup and specific cost reductions targeting macro changes.

A: Matt Beasley said no specific revenue outlook provided, but normal seasonality expected. Cost initiatives like compliance campaigns continue.

Q: Scott Group from Wolfe Research inquired about March to April tonnage and revenue per hundredweight seasonality and dynamic pricing impact.

A: Judy McReynolds and Seth Runser discussed disciplined pricing, strong pricing metrics, and profitable growth focus with core LTL business.

Q: Ben Moore from Citi asked about breaking out OR improvement and tariff headwinds.

A: Judy McReynolds and Matt Godfrey mentioned strategic real estate and equipment investments contributing to OR improvement.

Q: Elliot from TD Cowen asked about LTL pricing environment and sequential growth in contracts.

A: Seth Runser stated rational pricing, strong pricing metrics, and focus on profitable growth with core LTL business.

Q: Chris Wetherbee from Wells Fargo asked about weight per shipment softness and dynamic pricing influence.

A: Seth Runser attributed weight per shipment softness to softer macro environment and customer shipment size reductions, with focus on retention and profitable growth.

Q: Ken Hoexter from Bank of America asked about pricing negativity and dynamic business revenue per shipment increase.

A: Seth Runser explained mix impact on revenue per hundredweight, dynamic pricing consistency, and focus on profitable growth.

Q: Jordan Alliger from Goldman Sachs asked about revenue per day trend and customer behavior changes due to tariffs.

A: Seth Runser discussed mixed customer responses to tariffs, with some waiting, others using inbound warehousing, and business as usual for many.

Q: Matt Milask from Stifel asked about retail exposure and percentage tied to China inbound traffic.

A: Matt Beasley stated retail exposure around 10%, not significant.

Q: Stephanie Moore from Jefferies asked about levers in stagflation environment.

A: Seth Runser discussed focus on revenue growth, efficiency projects using AI and machine learning, real estate strategy, and asset light profitability improvements.

Q: Tom Wadewitz from UBS asked about SMB mix and seasonal pickup expectations.

A: Matt Beasley discussed SMB focus, asset light shipment mix shifts, and expected seasonal pickup in shipments driving OR improvement.

Q: Brian Ostendorf from JPMorgan asked about CapEx low end, UPack context, and Voxx Vision pilot benefits.

A: Matt Beasley talked about capital focus on maintenance and strategic projects, UPack trend consistent with housing market, and Voxx Vision pilot expected to contribute to EPS as scaled